The BOTA Foundation explained (Part Eleven): Future BOTAs and dictators' money
Tuesday, April 28, 2015 at 7:18AM
Aaron Bornstein in Equatorial Guinea, James Giffen, Kazakhstan, Nigeria, Remediation, Switzerland, Teodorin Obiang, The BOTA Foundation, retribution

The BOTA Foundation was able to take the $115 million from the corruption case associated with James GIffen and use it effectively and efficiently to assist more than 200,000 poor children, youth and their families in Kazakhstan. 

Created in 2009 based on an agreement by the governments of the U.S., Switzerland and Kazakhstan (brokered by the World Bank), BOTA to date is the only such foundation to emerge from a FCPA prosecution. 

The question is: will the BOTA case be unique? A one-off? Or is the example of BOTA replicable? 

There are two distinct pots of corruption money that have the potential to be turned into foundations. The first is using assets recovered through investigation and trial judgments against politicians who raided the public treasury (think about Marcos in the Philippines or Sani Abacha in Nigeria). The second potential source of funds is criminal judgments or settlements in relation to corporate corruption cases.

I'll deal in this post with assets recovered through investigations and trials in this post. And Andy will deal with corporate enforcement actions in the next, and concluding, post.

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There is a small but growing movement consisting of civil society organizations, transparency advocates and government officials promoting the idea that the foundation restitution model can and should be replicated. 

The track record of taking recovered funds from ex-dictators and returning them directly to the "new" government in power is not good. In countries such as the Philippines, Nigeria and Peru, returned funds "disappeared" again, most likely to fuel another cycle unaccountability and corruption.

Yet it usually takes years between the start of investigations, trials, appeals and final judgments to recover  stolen assets. After all of these efforts, it simply does not make sense to return the funds without strict guarantees that they will be used effectively and transparently. A proven foundation mechanism like BOTA could be established in a large number of countries where asset recovery efforts are taking place -- including Nigeria, Uzbekistan, Egypt, Libya and other nations where the needs are great but accountability mechanisms lacking. 

A major impediment to setting up foundations is that the "new" governments which requested the funds back have the right to get these, according to the UN Convention against Corruption. However there is hope. 

In places like Ukraine there have been discussions between representatives of the Swiss government, NGOs and the new Ukrainian government about possibly channeling recovered money through a BOTA like institution. 

Another positive sign? According to a knowledgeable U.S. government official, the Department of Justice hasn't moved towards creating another BOTA yet but is open to the idea, if it makes sense to do so. A recent DOJ settlement with Nguema Obiang, the son of Equatorial Guinea’s president, is indicative of the intent to return seized assets to victims of corruption: $30 million of a recent corruption settlement will be channeled via a charity and through the U.S. government directly to help poor Equatorial Guineans.

The more that such settlements become the norm, the more chance that the BOTA model will indeed be replicated. This is critical. There are billions of dollars of ex-dictators' assets currently being tracked down in courts world-wide.

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Andy Spalding will conclude this series in the next post, with a discussion of future BOTAs and the FCPA.

Part One of this series is here, Part Two is here, Part Three is here, Part Four is here, Part Five is here, Part Six is here, Part Seven is here, Part Eight is here, Part Nine is here, and Part Ten is here.

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Aaron Bornstein was the Executive Director of BOTA Foundation, employed by a Washington, D.C. based NGO called IREX, from 2011 until its close in 2014. He is a foundation and international development professional who has worked in 8 different countries on a variety of civil society strengthening, poverty alleviation, and other projects. Aaron is interested in receiving institutional support for the more extensive documentation of the BOTA experience that he is working on. Please send your suggestions, along with your feedback on the BOTA series, to abornstein19@gmail.com.

Article originally appeared on The FCPA Blog (https://www.fcpablog.com/).
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